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Related-party Transactions
 12 Months Ended
Dec. 31, 2012
Related Party Transactions [Abstract]  
Related Party Transactions Disclosure [Text Block]

Note 21. Related-party Transactions

 

(a)Name and relationship

 

Name of related parties Relationship
   
Chimei Innolux Corporation (CMI) Principal Owner (1)
   
Chi Mei Optoelectronics Corp. (CMO) The Company’s Chairman represented on CMO’s Board of Directors ,expired on March 18, 2010(1)
   
Chi Mei Optoelectronics Japan, Co., Ltd. (CMO-Japan) Wholly owned subsidiary of CMI (2)
   
NEXGEN Mediatech Inc. (NEXGEN) The Company’s Chairman represented on NEXGEN’s Board of Directors, not included as related party since July 2011
   
Chi Lin Technology Co., Ltd. (Chi Lin Tech) The Company’s Chairman represented on Chi Lin Tech’s Board of Directors, not included as related party since May 2011
   
NingBo Chi Mei Electronics Ltd. (CME-NingBo) The subsidiary of CMI (2)
   
NingBo Chi Mei Optoelectronics Ltd. (CMO-NingBo) The subsidiary of CMI (2)
   
NanHai Chi Mei Optoelectronics Ltd. (CMO- NanHai) The subsidiary of CMI (2)
   

  

Name of related parties Relationship
   
Chi Mei Logistics Corp. (CMLC) The subsidiary of CMI (2), not included as related party since July 2011.
   
NingBo Chi Mei Logistics Corp. (CMLC-NingBo) The subsidiary of CMI (2)
   
Foshan Chi Mei Logistics Ltd. (CMLC-Foshan) The subsidiary of CMI (2)
   
Dongguan Chi Hsin Electronics Co., Ltd. (Chi Hsin-Dongguan) The subsidiary of CMI (2)
   
NingBo ChiHsin Electronics Ltd. (Chi Hsin-NingBo) The subsidiary of CMI (2)
   
Fulintec Science Engineering Co., Ltd. (Fulintec) The subsidiary of CMI (2), not included as related party since May 2011
   
ShenZhen Nexgen Trading Co., Ltd. (ShenZhen Nexgen) The subsidiary of NEXGEN, not included as related party since July 2011
   
TPO Displays Japan K.K. (TPO Japan) The subsidiary of CMI, as related party since March 18, 2010
   
TPO Displays Hong Kong Limited (TPO Hong Kong) The subsidiary of CMI, as related party since March 18, 2010
   
TPO Displays (Shanghai) Ltd. (TPO Shanghai) The subsidiary of CMI, as related party since March 18, 2010
   
TPO Displays (Nanjing) Ltd. (TPO-NJ) The subsidiary of CMI, as related party since March 18, 2010
   
Lakers Trading Ltd. (Lakers) The subsidiary of CMI, as related party since March 18, 2010
   
Ampower Technology Co., Ltd. (Ampower) Related party in substance, not included as related party since March 18, 2010
   
Amlink (Shanghai) Ltd. (Amlink) Related party in substance, not included as related party since March 18, 2010
   
Shinyoptics Corp. (Shinyoptics) Equity method investee of the Company, not included as related party since October 1, 2010
   
Hangzhou Crystal Display Technology Co., Ltd. (Crystal) Equity method investee of the Company, not included as related party since May 2011

  

(1)CMO, Innolux Display Corporation, and TPO Displays Corporation agreed to conduct a merger of the three companies. The merger transaction was completed on March 18, 2010. Innolux is the surviving entity following the merger and is renamed Chimei Innolux Corporation, or CMI. On January 1, 2013, CMI changed its name as Innolux Corporation.

 

(2)The entities are the subsidiary of CMO before March 18, 2010.

 

(b)Significant transactions with related parties

 

(i)Revenues and accounts receivable

 

Revenues from related parties are summarized as follows:

 

  Year Ended December 31, 
  2010  2011  2012 
  (in thousands) 
          
CMO- NingBo $167,255   123,888   93,664 
CMO- NanHai  51,821   41,241   63,375 
CMI  56,770   55,629   56,221 
CME- NingBo  8,592   18,889   21,673 
Chi Hsin- NingBo  19,730   16,806   12,637 
CMO  15,602   -   - 
Others (individually below 5%)  18,854   1,780   4,404 
  $338,624   258,233   251,974 

 

A breakdown by product type for sales to CMO/CMI and its affiliates is summarized as follows:

 

  Year Ended December 31, 
  2010  2011  2012 
  (in thousands) 
          
Display driver for large-size applications $297,146   210,137   190,963 
Display driver for consumer electronics applications  27,189   29,316   40,582 
Display driver for mobile handsets  10,170   14,454   14,748 
Others  1,090   4,249   5,681 
  $335,595   258,156   251,974 

  

The sales prices with CMO/CMI and its affiliates are comparable to those offered to unrelated third parties.

 

The related accounts receivable resulting from the above sales as of December 31, 2011 and 2012, were as follows:

 

  December 31, 
  2011  2012 
  (in thousands) 
       
CMO- NingBo $33,981   31,421 
CMI  17,690   17,319 
CMO- NanHai  17,019   13,390 
CME- NingBo  6,629   5,947 
Chi Hsin- NingBo  4,038   3,210 
Others (individually below 5%)  559   2,145 
   79,916   73,432 
Allowance for sales returns and discounts  (83)  (174)
  $79,833   73,258 

 

The credit terms granted to CMI and its affiliates ranged from 30 days to 120 days, and the credit terms granted to other related parties ranged from 45 days to 90 days. The credit terms offered to unrelated third parties ranged from 15 days to 150 days.

 

(ii)Property transactions

 

In 2010, the Company purchased equipment amounting to $71 thousand from Fulintec, respectively. The purchase transaction in 2010 had been full paid as of December 31, 2010.

 

(iii)Lease

 

The Company entered into several lease contracts with CMO, CMI, CMLC, CMLC-NingBo, CMLC-Foshan and CMO-NanHai for leasing office space, facilities and inventory locations. For the years ended December 31, 2010, 2011 and 2012, the related rent and utility expenses resulting from the aforementioned transactions amounted to $1,119 thousand, $705 thousand and $828 thousand, respectively, and were recorded as cost of revenue and operating expenses in the accompanying consolidated statements of income. As of December 31, 2011 and 2012, the related payables resulting from the aforementioned transactions amounted to $326 thousand and $206 thousand, respectively, and were recorded as other accrued expenses in the accompanying consolidated balance sheets.

  

As of December 31, 2012, future minimum lease payments under non-cancelable operating leases with related parties are as follows:

 

Duration Amount 
  (in thousands) 
    
January 1, 2013~December 31, 2013 $195 
January 1, 2014~December 31, 2014  187 
January 1, 2015~December 31, 2015  187 
January 1, 2016~December 31, 2016  187 
January 1, 2017~December 31, 2017  187 
After January 1, 2018  1,179 
  $2,122 

 

(iv)Others

 

In 2010, 2011 and 2012, the Company purchased consumable and miscellaneous items amounting to $449 thousand, $348 thousand and $31 thousand, respectively, from CMI, CMO-NanHai, CMLC-NingBo, Chi Lin Tech, NEXGEN, Fulintec and, which were charged to cost of revenues and operating expenses. As of December 31, 2011 and 2012, the related payables resulting from the aforementioned transactions were $9 thousand and nil, respectively.

 

In 2010, Chi Lin Tech provided IC bonding service on prototype panels for the Company’s research activities for a fee of $12 thousand, which was charged to research and development expense. The related process fee payables resulting from the aforementioned transactions had been full paid in 2010.